January 2014Senior Management

Safeguard Your Reputation and Bottom Line with Corporate Diplomacy

Corporate Diplomacy

Angered by Shell’s arctic drilling plans, Greenpeace started a multi-stage online hoax last year to raise public awareness. A YouTube video, website with an interactive ad generator, and Twitter feed went viral as millions around the world — and dozens of media outlets — spread the word. Forbes called it a “social media nightmare.” Instead of invading oil rigs with boats full of protesters, Greenpeace was able to send reputation-damaging blows without leaving dry land.

Most crises don’t attract this much attention, and most aren’t started by global NGOs with decades of experience and big budgets. But, says Wharton management professor Witold Henisz, “Today, thanks to the Internet and the spread of social media, anyone with a smart phone and a grudge can push a negative message out to a global audience within a matter of seconds. Activists are increasingly able to access virtually everything companies or their suppliers do anywhere in the world. The financial and reputational damage a single individual or small group is capable of causing can be catastrophic.”

Henisz, an expert on corporate reputation management and author of a forthcoming (April 2014) book on the topic, continues: “Companies expanding into unfamiliar foreign markets to source natural resources or access growing middle classes can be particularly vulnerable, as these same countries also tend to have gaps in or weak enforcement of regulations governing human rights, environmental discharge, and safety and health; local populations skeptical of foreign investors; and grassroots activists who are increasingly watching over the operations of multinational corporations.”

Henisz is faculty director of a new Wharton Executive Education program designed to help senior leaders develop a broad set of tools needed to manage these risks, well before a crisis hits. Corporate Diplomacy: Building Reputations and Relationships with External Stakeholders has an integrative perspective that goes beyond lobbying, communications, or corporate social responsibility alone. Henisz stresses, “Diplomacy must be an organization-wide concern. You need to build a culture that involves everyone in the effort to assess stakeholder opinion and integrate that knowledge into financial and business planning as well as into every interaction between employees and external stakeholders. Doing so helps to avoid costly delays and disruptions in opening or operating facilities, getting resources, and launching new products or services. In the program, participants will learn how to prepare and execute on many levels, and they will test their new knowledge and skills in a newly developed half-day simulation that challenges them to respond to a complex crisis.”

Joining him in the program are Wharton management professors Sigal Barsade, an international expert on emotional intelligence, and Mario Moussa,  co-author of The Art of Woo: Using Strategic Persuasion to Sell Your Ideas. Moussa helps participants develop the persuasion skills that are key when it comes to working with external stakeholders. “Research shows that over 40 percent of executives who were previously successful in their home countries have trouble adapting in unfamiliar cultural settings,” he says.

“Influence and persuasion are interactive, interpersonal processes,” says Moussa. ”You must understand what motivates someone and speak to that. Behave and think like an anthropologist to develop that understanding. Look and listen for clues. Survey the landscape. Learning who your external stakeholders are, how much influence they have, and what is important to them takes work.”

During the four-day program, participants will hear from three of the world’s leading experts on corporate diplomacy and foreign relations. Edward W. Gillespie, founder of a strategic consulting firm that provides high-level advice to companies and CEOS, coalitions, and trade associations, was a senior advisor to the Mitt Romney 2012 presidential campaign and counselor to President George W. Bush. Carlos Gutierrez was chairman of the board and CEO of the Kellogg Company, and served as U.S. Secretary of Commerce from 2005 to 2009. Gutierrez is a founder and chairman of Global Political Strategies (GPS), an international strategic consulting service and a division of APCO Worldwide, a Washington, DC-based global communications firm, as well as vice chair of the global strategy firm Albright Stonebridge Group. Vincent Schiavone, co-founder and CEO of ListenLogic, is an expert in social business intelligence, privacy, and information security.

“Corporate diplomacy is increasingly a driver of success and failure in emerging and foreign markets,” says Henisz. “If you don’t understand and build relationships with external stakeholders, you will face higher levels of higher impact risks. But, if you do, you could enter a market that others won’t or can’t. The skills of the Corporate Diplomat can be used to create a powerful competitive advantage.”